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Health insurance benefits will change, but not go away, under ACA

By JONATHAN BILYK -
jbilyk@shawmedia.com

Aug. 24, 2013

Sandy Bressner – sbressner@shawmedia.com

Caption

Mike Deagle, owner of Deagle Benefit Group in Batavia, is a health insurance broker who works with small businesses to obtain health insurance and to stay on top of the changes in the marketplace, particularly as it relates to the Affordable Care Act.

Marcia Boyce still will provide health insurance for her employees next year.

But Boyce, owner of Boyce Body Works in Batavia, said she doesn’t yet know what that will mean for her business or for the 30 or so people who work there.

“I’ve been reading and studying and learning as much as I can about what’s going on,” Boyce said. “But to be honest, I still don’t know what I should expect next year.”

More than three years ago, Congress passed the Patient Protection and Affordable Care Act, a sweeping health care reform law promoted by President Barack Obama that since has come to be known as “Obamacare.”

The law will produce many changes to the way Americans participate in the health care system, as the law moves to change the health care system itself.

But few changes may be felt as keenly as the way in which businesses continue providing health insurance as a workplace benefit.

For decades, health insurance coverage in America typically has come from employers who provide it as part of an overall compensation package. That historically left millions of Americans without health insurance, because they didn’t purchase individual policies, their employers didn’t provide coverage or they thought it was too expensive.

In 2011, 54.7 percent of American workers were covered under health plans through their employers, according to a report issued in July by the Employment Benefit Research Institute. The report noted just 22.4 percent of uninsured workers said they hadn’t been offered health benefits from their employers.

A survey released Aug. 20 by the Kaiser Family Foundation indicated that 57 percent of firms offer health benefits to their workers, similar to the 60 percent that offered benefits in 2011.

Proponents of the ACA have said it will help reduce the ranks of the uninsured. In October, public health insurance marketplaces, or exchanges, will open and individuals can purchase health insurance – regardless if their employers offer health insurance. By 2014, the ACA will require all Americans to hold “minimum essential coverage.”

The ACA had scheduled a so-called “employer mandate” to take effect in 2014, which would have required all businesses with more than 50 full-time equivalent workers to offer health insurance to its employees or pay a penalty. That has been pushed back to 2015.

However, those whose business it is to advise businesses on the ACA say they are advising that extra year is not a time to relax.

“The first thing I advise any business owner is: Don’t stick your head in the sand,” said Elizabeth Milito, senior executive counsel for the National Federation of Independent Business.

She noted the rollout of the ACA appears to be fluid, with rules still being written and provisions being delayed.

But she advised employers be aware of what’s coming.

She noted some employers have called her with questions from employees based on a belief that the employers must provide all employees with free or low-cost health insurance.

“It’s kind of a whisper-down-the-line effect,” Milito said. “So when it gets down to the employees, they’ve gotten bad information, and then they bring their questions to the people they go to with any sort of benefits question.”

She said employers should educate themselves on the intricacies of the employer mandate, particularly as it relates to determining how many employees they have. She noted the rules for counting employees under the ACA are not the same as those they might encounter in other federal or state labor laws.

“If your CPA or lawyer doesn’t know much about ACA, then find one that does,” Milito said.

She has heard from some business owners who have reduced their full-time headcount by shifting more workers to part time or redesignating them as “independent contractors.”

But Milito said the NFIB cautions employers against such tactics.

“Beware of workarounds,” she said. “They can be problematic. It’s not going to get you out of the requirements under the ACA, and it may get you into hot water with other government agencies.”

Mike Deagle, an insurance broker through his company Deagle Benefit Group Inc., of Batavia, and president of the Illinois State Association of Health Underwriters, said there are other impacts of the law of which employers should be aware.

He noted that the law will greatly reduce the number of health plans offered by insurers. And the law has mandated changes to how rates are
determined.

Previously, rates could be determined by a number of factors, including medical history, gender, lifestyle and occupation, among others.

In 2014, Deagle said, insurance premiums will only be rated based on the age of the insured, family composition, the geographic region in which they live, and, for individual policies, whether the insured smokes.

He said that will result in otherwise healthy individuals of different ages being charged different rates for health insurance, even under the same plan.

Deagle said the changes will undoubtedly result in changes in how much employers must pay to insure their workers.

This year, the Kaiser Foundation found health insurance premiums increased by about 4 percent from 2012.

But how much they will increase next year remains to be seen, as insurers are keeping that information close to the vest, Deagle said.

And that means it’s difficult to predict how the businesses will respond, he said, noting that some may decide to send employees into the health insurance exchanges or simply provide stipends.

Employers will be required to provide workers with a notice regarding the opening of the exchanges by Oct. 1, Milito said.

Boyce said she is waiting to hear from her company’s insurance providers before she makes any decisions, as much of her calculus will be driven by changes to the cost and terms of the policies she will be offered for next year.

“We’ve seen our costs go up and up for years now, sometimes by 20 percent or more,” Boyce said. “Those are costs we can’t continue to just absorb, so, if it happens again, we’ll have to see what our options are.”

However, Boyce said one of her choices, at this point, is not to drop health insurance altogether, even though, as an employer of fewer than 50 workers, she is not subject to the employer mandate.

Deagle and Milito also said they believed most employers who now offer health insurance would continue to do so, as it is used as a worker recruitment and retention tool.

That view was backed by a recent survey by workplace issues consulting firm Challenger, Gray & Christmas found that 82 percent of companies will continue to offer health care coverage next year. And none of the human resources executives surveyed said their companies will drop health coverage when the individual mandate takes effect Jan. 1.